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Secular Market Trends

In a secular bear market, the primary bull markets are occasionally shorter than the primary bear markets and rarely pay compensation for the real losses of the primary bear markets occurring during this extended cycle. For instance, in the 1966–82 secular bear market in stocks, there was barely any nominal loss. But in real terms the loss was distressing. (In the past most housing recessions were of a sluggish nature, thereby allowing inflation to keep housing prices balanced.) Another illustration of a secular bear market was seen in “gold” during the time period of January 1980 to June 1999. During this time period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g), and became component of the Great Commodities Depression. The S&P 500 faced a secular bull market over a similar time period (~1982–2000). A secular market trend is a long-term trend that generally lasts 5 to 25 years (but whose distribution is more or less bell shaped around 17 years, in the stock market), and consists of sequential primary trends. In a secular bull market the primary bear markets have in the history almost always been shorter and less punishing than the primary bull markets were rewarding. Every bear market has rarely (if ever) wiped out the real (inflation adjusted) gains of the previous bull markets, and the succeeding bull markets have generally made up for the real losses of any previous bear markets. This is one of the reasons why a secular market trend may be said to take in the primary trends within it. The United States was described as being in a secular bull market from about 1983 to late 2007, with brief upsets together with the crash of 1987 and the dot-com bust of 2000–2002.